Cassidy: FlightCar's fight with SFO is an innovation parable for our time

At left, Jason Seeber and his family, drops off their car at the FlightCar lot in Burlingame, Calif., on Wednesday, June 12, 2013. The family was on their way to Florida for vacation and found FlightCar through a web search. (LiPo Ching/Bay Area News Group)

Rujul Zaparde, CEO of car-sharing service FlightCar, has a startup story right out of central casting.

He and his two co-founders are teenagers. They have all either put off or dropped out of Ivy League-caliber colleges. They've come up with an idea that looks crazy on the surface, but on second thought ...

They also have something in common with an increasing number of startups that are looking to disrupt existing industries and technologies: The fusty rules and regulations that were in place before they came along don't exactly fit what they're trying to do.

Rujul Zaparde, the 18-year-old CEO and Cofounder of FlightCar, at the FlightCar lot in Burlingame, Calif., on Wednesday, June 12, 2013. (LiPo Ching/Bay Area News Group)
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LiPo Ching
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The result is that FlightCar, which markets itself to travelers in and out of San Francisco International Airport, is being sued by the city, which says the operation amounts to an airport car rental agency and therefore needs to pay all the airport charges and fees that other rental agencies pay.

"They've been doing it the same way for the last 30 or 40 years," says Zaparde, 18, who passed up Harvard to co-found the business. "We've come up with a new business model. If we didn't face opposition it would be extremely surprising."

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About that business model. I thought it was nuts at first. Here's how it works: An air passenger drops her car off at FlightCar's parking lot in Burlingame. A limo drives her to the airport. FlightCar rents the traveler's car, presumably to an arriving passenger. The car owner gets free parking, a carwash and a small cut of the rental fee. What the arriving passenger gets is a car for far less than an airport rental. (Say, $21 a day for a Nissan Altima.)

When Zaparde looks at the business model, he sees an operation that efficiently puts underutilized resources (as in parked cars) to use while saving consumers money. He sees a game-changer, a world-beater.

When San Francisco city officials look at it, they see a rental car company that is enjoying an unfair advantage over similar businesses in the area. Granted, they see a rental car company with a nifty twist, but a company that would be a lot niftier if it followed the rules other rental car companies follow.

"SFO is very concerned that people may think they're against innovation," says Jennifer Choi, the deputy city attorney handling the case. "They're not. There was quite a bit of correspondence back and forth. They tried to welcome them into their business community."

The difference in perspectives is hardly surprising. Each side in the dispute is looking out for its own interest. And that's exactly what we need to push innovation forward. It's practically a natural ecosystem. We need people like Zapardre and his co-founders, Shri Graneshram, 19, (dropped out of MIT) and Kevin Petrovic, 19 (delayed attending Princeton). We need people who are creative, confident, maybe even arrogant, to fight for ideas that propel us into the future.

And we need regulators who at times act as a buzz-kill in order to keep new ideas from devolving into chaos.

But more than all that, we need the two to talk to each other, to find ways to accommodate new ideas while protecting the broad interests of the rest of us. The clash of innovation and regulation has always been with us. But with the pace of innovation accelerating, the tension is becoming a common theme.

Think of recent history. Car- and ride-sharing companies, like Uber, Sidecar and Lyft have all found themselves performing a delicate dance around local ordinances. And Airbnb, which matches travelers with private homes to stay in, has at times seen its model questioned by regulators as well.

No one should be surprised, says David Hantman, Airbnb's global head of public policy. When something new comes along, government agencies often focus initially on potential problems and ways to protect the public from them. But as time and discussions go on, regulators often realize that a new way of doing business is beneficial for consumers and the economy.

"The more they learn," Hantman says of regulators, "the better it gets."

FlightCar would be wise to learn from Airbnb's experience. Zaparde says he'd like to work out an acceptable arrangement with SFO outside of court. But both the airport and the City Attorney's Office say that while they're willing to talk, they haven't heard from FlightCar since the suit was filed last month.

What FlightCar has going for it is a team of founders with that unshakable confidence that seems to infect every startup. As I talked with Zaparde recently outside the plastic garden shed that serves as his office at the parking lot, he displayed a laser focus. What made you think you could successfully launch a paradigm-shifting business, I asked him?

"We didn't think about it that way," Zaparde says. "We were more, 'We're just going to do it.' "

In order to do it, the disagreements with SFO are going to have to be worked out. Hopefully, the two sides can get together and come up with a way to drive us into the future together.